Distribution Agreement for KCI - Analyst Blog

Medical technology company Kinetic Concepts’ (KCI) business unit, LifeCell Corporation, entered into an agreement with Novadaq Technologies to distribute the latter’s SPY imaging system in North American surgical markets. The imaging system is focused at breast reconstruction, head and neck, and colorectal surgical specialties – an area with immense potential where more than half a million procedures are projected to be performed annually.

While LifeCell will provide market development and commercialization activities of the imaging system, Novadaq will be responsible for manufacturing, field service and research and development. The SPY system enables surgeons to assess poor tissue perfusion at the surgical site, which is critical to the success of tissue revascularization and survival.

Kinetic Concepts primarily deals with wound care and therapeutic products. The company’s wound healing and tissue repair systems’ product line incorporates its vacuum-assisted closure (VAC) technology to meet the specific patient requirements, including acute care setting, serious trauma wounds, failed surgical closures, amputations, and serious pressure ulcers.

Kinetic Concepts derives its revenues from three segments – Active Healing Solutions (AHS), Regenerative Medicine (primarily the operations of LifeCell, a wholly-owned subsidiary) and Therapeutic Support Systems (TSS). During the second quarter of fiscal 2010, these three segments recorded revenues of $347.7 million (down 5% year over year), $83.7 million (up 17.8%) and $66.3 million (down 6.4%), respectively.

The Regenerative Medicine division’s revenue growth was influenced by the sales from the regenerative tissue matrix, Strattice ($33.2 million, representing 40% of total division’s revenue), and 2% contribution from the newly launched products in the European markets.

We believe the agreement between the two companies should help Kinetic Concepts to generate higher revenues from the Regenerative Medicine segment going ahead. This is all the more significant in a scenario, where it’s other divisions are not performing up to the mark.
 
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